United States District Court, E.D. California
alleges defendant is improperly attempting to foreclose on
her home after she successfully concluded Chapter 13
bankruptcy proceedings. Defendant contends plaintiff violated
the parties’ agreement by failing to pay insurance and
taxes for her property throughout a portion of the bankruptcy
proceedings. Defendant now moves for summary judgment. As
explained below, the motion is GRANTED in part and DENIED in
following material facts (“UMF”) are drawn from
defendant Wells Fargo Bank, N.A.’s statement of
undisputed facts, ECF No. 60-1, plaintiff Debra
London’s responses to that statement, ECF No. 68-1 at
2-13,  London’s statement of undisputed
facts (“Pl. UMF”),  ECF No. 68-1 at 14-20, and Wells
Fargo’s responses, ECF No. 72-2. Unless otherwise
noted, the facts the court relies on here are undisputed.
London’s Loan, Modification and Default
owns and lives at 16355 Targowski Lane, Tracy, California
95304. Pl. UMF 1. On June 6, 2006, London obtained a $725,
000 loan from World Savings Bank, FSB, Wells Fargo’s
predecessor,  with the loan memorialized by a note and
secured by a deed of trust against London’s property.
UMF 1, 3. The loan agreement contains several terms,
including a term under which London agreed to pay taxes and
hazard insurance premiums on the property and repay Wells
Fargo for advances it made for taxes and insurance through an
escrow account. UMF 2; Resp. UMF 2 (London disputing insofar
“Wells Fargo fails to provide the full context of the
loan agreement” and identifying other relevant terms).
The promissory note includes a provision that requires Wells
Fargo “to deliver or mail to [London] a notice of any
changes in the amount of [her] monthly payment, called
‘Payment Change Notice, ’ before each Payment
Change Date. The Payment Change Notice will include
information required by law.” Resp. UMF 2; Def.
2 § 3(H).
30, 2009, London received a loan modification, forgiving
outstanding interest through July 14, 2009, with modified
payments on the $668, 193.07 loan balance beginning on August
15, 2009. SUF 4; Def. Ex. 4 at 1; Pl. Ex. 1 at
Under the modification, London’s payment and interest
rate would increase on July 15 of each year through July 15,
2015, at which point London would begin making principal and
interest payments. Def. Ex. 4 at 1; Pl. Ex. 1 at 1. The
modification agreement provided London’s payments
“DO NOT include amounts necessary for escrow.”
UMF 4 (original emphasis).
16, 2010, Wells Fargo informed London by letter that she had
defaulted on the loan and indicated that Wells Fargo intended
to commence foreclosure, with London’s loan $6, 694.62
past due. UMF 5 (disputed only as to legal conclusion loan
was in default); Def. Ex. 5.
London’s Chapter 13 Bankruptcy Petition, Wells
Fargo’s Objection, and London’s First Amended
January 2, 2011, London filed a Chapter 13 bankruptcy
petition. UMF 6. During London’s bankruptcy
proceedings, Wells Fargo advanced payments to cover property
taxes and property insurance. UMF 11. On January 10, 2011,
Wells Fargo sent London an initial escrow account disclosure
statement explaining Wells Fargo had established an escrow
account, stating London owed a minimum payment of $2, 241.23,
an escrow payment of $1, 045.48, and $26.10 in
“Shortage Payment or Overage Credit” because of a
$313.16 escrow shortage, with a new total monthly payment of
$3, 312.81 due March 15, 2011. UMF 12; Def. Ex. 6. On January
17, 2011, Wells Fargo sent a letter to London’s
bankruptcy attorney, Jeffrey M. Meisner, stating
London’s “first post-petition payment of $3130.13
is/was due on 1/15/2011.” UMF 13; Def. Ex. 7. The
letter also stated, “This amount may have been reduced
due to the removal of an existing escrow shortage payment.
Any escrow that was due at the time of the bankruptcy filing
may have been added to the proof of claim.” Def. Ex. 7.
The letter noted, “For the duration of the bankruptcy,
billing statements will not be mailed.” Id.
February 22, 2011, Wells Fargo objected to confirmation of
London’s proposed bankruptcy plan. UMF 7; Def. Req. for
Jud. Notice (“RJN”), ECF No. 60-7,
In its objection, Wells Fargo stated that although
London’s proposed plan “schedules Wells Fargo as
a Class 1 creditor with pre filing [sic] arrearages of $24,
136.00 . . . . Pre-filing arrearages are owed to Wells Fargo
in this matter in the amount of $33, 294.60 . . . . As such,
it appears that the amount scheduled by the Debtor to be paid
under the supervision and control of the Chapter 13 Trustee
is insufficient to fund the proposed Plan.” Def. RJN
Ex. B ¶¶ 3-5 (emphasis omitted).
filed a first amended Chapter 13 bankruptcy plan on March 14,
2011, in which she listed Wells Fargo as her sole class one
secured creditor with a monthly contract installment of $3,
130.13 for pre-petition arrearages of $33, 294.60 at a 0
percent interest rate and with a monthly dividend of $574.04.
UMF 8; Conf. Plan,  Def. RJN Ex. C; Pl. Ex. 2, Pl. RJN, ECF
No. 67, Ex. B. Under London’s proposed plan, she would
pay the trustee $4, 126.00 each month for 60 months,
“subject to adjustment pursuant to section 3.10(d)
below.” Conf. Plan § 2.01. Under section 3.10(d),
for monthly contract installments paid by the trustee on
Class 1 claims,
Upon their receipt, Debtor shall mail or deliver to Trustee
all notices from Class 1 creditors including, without
limitation, statements, payment coupons, impound and escrow
notices, default notifications, and notices concerning
changes of the interest rate on variable interest rate loans.
The automatic stay is modified to permit the sending of such
notices. . . . If any such notice advises Debtor that the
amount of the contract installment payment has increased or
decreased, the plan payment shall be adjusted accordingly.
Id. § 3.01(d). Wells Fargo cites London’s
testimony that she could not specifically recall when or how
often she provided her bankruptcy attorney with documents she
received from Wells Fargo regarding her loan. UMF 9 (citing
London Dep., Def. Ex. 33 at 49:7–50:5,
50:22–51:24, 72:18– 74:6, 75:7–24). London
points to her testimony that she initially gave the trustee
and her attorney “everything [she] had from the
bank.” Resp. UMF 9 (citing London Dep. at
49:4–6). London also testified that after she filed for
bankruptcy, she did not “really remember getting much
correspondence . . . .” London Dep. at 37:25-38:1;
see also Id . at 51:21-24 (“Q: Do you recall,
after your bankruptcy started, maybe receiving correspondence
directly from Wells Fargo? A. Not that I can recall.”).
The Bankruptcy Court Approves London’s First
Amended Plan with Wells Fargo’s Approval and Consent;
London’s Bankruptcy Payments Begin
8, 2011, the bankruptcy court approved London’s first
amended Chapter 13 bankruptcy plan, with London to pay $4,
139 per month throughout the 60-month plan. UMF 10; Def. RJN
Ex. D at 58-59; D. London Decl. Ex. 2 at 12-13. That
court’s order also provided in relevant part:
“For months 4 through 60, the first mortgage arrears
owed to Wells Fargo Bank will be paid in the amount of
$594.55 per month until the arrears of $33, 294.60 are paid
in full. [¶] The Debtor’s plan payment will be $4,
139.00 per month for the duration of the 60 month
plan.” RJN Ex. D at 59. Wells Fargo’s counsel
signed the order approving the plan, noting Wells Fargo
“[a]pproved and consented, ” as did London and
the trustee. Id.
11, 2011, Wells Fargo sent letters to Meisner and the trustee
stating, under the terms of the modification agreement, the
interest rate on London’s loan would increase to 4.400
percent effective August 15, 2011, with London’s
monthly payments adjusting to $2, 450.05. UMF 14; Def. Ex. 8.
Wells Fargo noted that if it “pays the taxes and/or
insurance, please refer to the monthly billing statement for
the total payment amount with escrow.” UMF 14; Def. Ex.
8. In a Wells Fargo account statement dated July 19, 2011
with a payment due date of August 15, 2011, which Wells Fargo
contends it sent to London, Wells Fargo identified a $3,
521.63 total payment due, including $1, 071.58 in
“Escrow/Other, ” with $5, 129.37 in year-to-date
escrow disbursements for taxes. Def. Ex. 24 at 135;
see Smith Decl., ECF No. 60-2, ¶ 33
(identifying Exhibit 24 as “copies of monthly mortgage
statements sent to Plaintiff with statement dates on or about
January 2011 through November 2016”). This monthly
statement includes, as do all of Wells Fargo’s monthly
account statements, the following “IMPORTANT
If you are currently in Bankruptcy this statement is for
informational purposes only. It reflects Post Petition
amounts under Section 2 (except for Total Outstanding
Deferred Interest) and may not include all fees incurred.
Please contact the Bankruptcy Department at 1-866-259-7728 if
you would like to stop receiving statements, have any
questions, do not accept this statement as a conforming
statement, or to request Reinstatement Figures, as this
statement is not intended to be used for reinstatement
purposes. While the loan is in an active bankruptcy status,
you may not be able to access the account online.
Def. Ex. 24 at 135. Neither party acknowledges this
disclaimer or addresses its significance here.
August 3, 2011, the trustee sent London a letter explaining
he had received “correspondence . . . from your Lender
indicating your ongoing mortgage payment is decreasing from
$3, 0130.13 to $2, 450.05 effective 8/1/11. As a result of
that decrease, as provided for by your Chapter 13 Plan, your
plan payment is decreased from $4, 139.00 to $3, 384.00
starting August 25, 2011.” Pl. Ex. 3; Pl. UMF 5; Resp.
Pl. UMF 5 (disputing because the “$2, 450.05 . . . did
not cover escrow amounts advanced”).
London’s Monthly Payments and Escrow Account
to Wells Fargo, from September 2011 through March 2014,
London “made repeated payments of $2, 405.05 that were
insufficient to cover the monthly payment including escrow
charges advanced by Wells Fargo.” UMF 15; Resp. UMF 15
(London disputing, as she “made payments in the amount
of $3, 384.00 [to the trustee]”). Wells Fargo
acknowledges it “also received additional payments of
other amounts during this time, ” though it does not
explain how much it received or whether these amounts were
paid to London’s alleged escrow arrears. See
Smith Decl. ¶ 16 n.1; see also, e.g., Activity
Statement, Def. Ex. 18 at 92 (indicating Wells Fargo received
“Trustee Funds” in the amount of $1, 189.10 on
January 11, 2012 and “Debtor Funds” in the amount
of $2, 450.05 on January 12, 2012); Smith Decl. ¶ 27
(identifying Exhibit 18 as “a Customer Account Activity
Statement that itemizes debits and credits to the account, as
well as running balances of the unpaid principal, escrow,
unapplied funds, and details about fees charged to
[London’s] account” prepared by Wells Fargo in
response to London’s April 2016 inquiry).
17, 2012, Wells Fargo sent letters to Meisner and the trustee
indicating that with London’s August 2012 payment, the
interest rate on her loan would increase to 4.775 percent, as
provided under the modification agreement, with her monthly
payment increasing to $2, 658.86. UMF 17; Def. Ex. 9. The
letter also noted, “If Wells Fargo pays the taxes
and/or insurance, please refer to the monthly billing
statement for the total payment amount with escrow.”
UMF 17. London responds that Meisner was no longer her
bankruptcy counsel by this time, an assertion she repeats in
response to nearly every reference to Meisner after this
point, and she disputes that her then-current bankruptcy
attorney, Nicholas Lazzarini, received Wells Fargo’s
letter. Resp. UMF 17.Wells Fargo concedes it did not file a
notice of payment change (“PCN”) with the
bankruptcy court, as required under Bankruptcy Rule
3002.1(c),  in August 2012. UMF 37. Wells
Fargo’s records indicate it continued to receive
payments of $2, 450.05 and $594.55 in August 2012, as it had
in months prior. Activity Statement at 94.
5, 2013, Wells Fargo sent a letter to Meisner, stating Wells
Fargo’s internal review of London’s account
indicated Wells Fargo had not provided London “with a
timely notice in accordance with Federal Rule of Bankruptcy
Procedure 3002.1(c).” UMF 18. Wells Fargo further
informed Meisner it had “made the appropriate
adjustment to your client’s account.” UMF 18. The
letter does not explain which “adjustment” was
made. Def. Ex. 10. London again responds that Meisner was no
longer her bankruptcy attorney at this point. Resp. UMF 18.
17, 2013, Wells Fargo sent letters to Meisner and the trustee
stating, under the modification agreement, the interest rate
on London’s loan would increase to 5.150 percent, with
the monthly payment due on August 15, 2013 increasing to $2,
867.67. UMF 19; Def. Ex. 11. The letter again advised,
“[i]f Wells Fargo pays the taxes and/or insurance,
please refer to the monthly billing statement for the total
payment amount with escrow.” UMF 19; Def. Ex. 11. Wells
Fargo concedes it did not file a PCN with the bankruptcy
court, as required under Bankruptcy Rule 3002.1(c), for the
August 2013 payment change. UMF 37. Wells Fargo’s
records indicate it received payments of $2, 450.05 and
$594.55 in August 2013, as it had in the months prior.
Activity Statement at 96.
December 27, 2013, Wells Fargo sent an annual escrow account
disclosure statement to London’s Meisner, stating:
[E]ffective with the March 15, 2014 payment, the new
monthly/biweekly payment amount will be $4, 378.54. Our
records indicate the loan is contractually due for the
07-15-12 payment. [¶] Please adjust your records to
reflect the new post petition payment amount, if applicable.
The debtor and the Trustee have been notified of this payment
change under separate cover.
UMF 20; Def. Ex. 12.
to Wells Fargo’s records, London began making monthly
payments of $4, 378.54 and $594.55 in April 2014. Activity
Statement at 98; see UMF 15 (contending
“September 2011 through March 2014, Plaintiff made
repeated payments of $2, 450.05”); see also
UMF 36 (Wells Fargo filed a PCN on February 14, 2014).
August 11, 2014, Wells Fargo sent another letter to Meisner,
stating, as it had earlier, “Wells Fargo Home Mortgage
recently completed an internal review of your client’s
account referenced above. During this review, we discovered
your client was not provided with a timely notice in
accordance with Federal Rule of Bankruptcy Procedure
3002.1(c). As a result, we have made the appropriate
adjustment to your client’s account.” UMF 21,
Def. Ex. 13.
December 18, 2014, Wells Fargo sent a letter and an annual
escrow account disclosure statement to Meisner, stating:
[E]ffective with the February 15, 2015 payment, the new
monthly/biweekly payment amount will be $4, 399.31. Our
records indicate the loan is contractually due for the
Please adjust your records to reflect the new post petition
payment amount, if applicable.
UMF 22; Def. Ex. 14. Although the letter also states,
“[t]he debtor and the Trustee have been notified of
this payment change under separate cover, ” nothing in
the record indicates Wells Fargo notified London or the
trustee of this change. Def. Ex. 14; see Resp. UMF
22 (London disputing this letter was sent to Lazzarini).
Nonetheless, according to Wells Fargo’s records, in
March 2015, London began making monthly payments of $4,
399.31 and $594.44. Activity Statement at 99-100.
November 19, 2015, the United States Bankruptcy Court for the
District of Maryland filed an order approving a settlement
between the United States Trustee Program and Wells Fargo.
Def. Ex. 26 (letter and settlement payments to London, with
copy of settlement agreement following). The settlement arose
after “the Executive Office for United States Trustees
. . . approached Wells Fargo . . . with concerns regarding
the timeliness of filing and the failure to file PCNs
required under Bankruptcy Rule 3002.1” in bankruptcy
cases proceeding nationwide. Def. Ex. 26 at 145. The
settlement provided that it may “not be used as an
admission of liability, violation, or wrongdoing by Wells
Fargo” and the Maryland bankruptcy court
“retain[ed] exclusive jurisdiction over all matters
subject to” the settlement. Id. at 161.
Fargo sent London an escrow account disclosure statement
dated December 7, 2015, indicating London had an escrow
shortage of $9, 288.65 and providing her with two payment
options to cure the shortage in connection with the making of
her February 15, 2016 payment. UMF 23; Def. Ex. 15. Under the
first option, London would pay the entire escrow shortage in
a single payment, then a new monthly payment of $5, 122.46.
Def. Ex. 15. Under the second option, she would pay the
escrow shortage over 12 months, with a new monthly payment of
$5, 896.41. Id.; UMF 23.
London Completes Payments under Bankruptcy Plan
February 18, 2016, the trustee sent London a letter, stating:
“[Y]ou have completed your Chapter 13 Plan. You may
stop making payments to the Trustee. You need to commence
making payments directly to your mortgage lender(s). Please
contact your lender(s) to obtain current payment
information.” Pl. Ex. 4. That same day, the trustee